A report from the House of Commons’ public accounts committee has raised concerns about the future repayment of tens of millions of pounds in Covid-19 loans distributed to rugby union clubs and other sports organizations. The loans were part of a broader £474 million package from the Department for Culture, Media and Sport (DCMS) to support the sports and culture sectors during the pandemic. However, the committee has warned that there is significant uncertainty surrounding the repayment of these funds.
The committee expressed skepticism regarding the ability of the DCMS to recover the majority of the money it disbursed. Despite the department’s optimistic outlook on repayment, the committee has highlighted the lack of clarity about how much of the loan book will actually be repaid. This uncertainty is particularly acute in the case of rugby clubs, which received a significant portion of the loans.
In the report, the committee also pointed to what it described as a “gap in oversight and accountability” related to the £123.8 million in loans given to rugby clubs. One area of concern was the potential conflict of interest involving Susannah Storey, the permanent secretary of the DCMS, who is married to Pev Hooper, a director of Premiership Rugby and a managing partner of CVC Capital Partners. Although Storey had declared the conflict of interest, the committee noted that it was unable to directly question her about the rugby loans. This situation, according to the committee, left the department vulnerable in terms of both the size of the loans and the financial health of the rugby sector.
In response to the committee’s concerns, Storey defended her actions, stating that she had always been transparent about the conflict of interest and had properly managed it within the department. She also argued that the conflict was documented in the department’s annual accounts, and thus there was no gap in accountability. However, the committee’s concerns about the DCMS’s management of the rugby loans remain unresolved.
A report from the National Audit Office in December had already indicated that the DCMS did not expect to recover up to £29 million of the £41.6 million loaned to three Premiership clubs: London Irish, Wasps, and Worcester, all of which had become insolvent. Additionally, the department anticipated losing £11 million in interest payments on those loans. Despite this, the DCMS remains optimistic about recovering the remaining funds. It insists that most of the £400 million still outstanding will eventually be repaid, although the public accounts committee has questioned this outlook.
The DCMS has asserted that it is committed to protecting taxpayers’ money and is determined to recover the funds distributed during the previous administration. It maintains that 97% of repayments due have already been collected and that all borrowers are expected to begin repaying by the end of this year. Nonetheless, given the uncertainty surrounding the financial stability of many of the organizations that received loans, the public accounts committee’s report serves as a cautionary note regarding the challenges still ahead in recovering these funds.
